Finance

Only Lenders to Blame for their "Bad Debt"

Trade and industry minister, Jim Fitzpatrick, said that lenders are the only ones to blame for raising the levels of bad debts. He went on to say that the government has no intentions whatsoever to monitor the companies that regulate any insolvency agreements and that although the number of bankruptcies should be watched; the government has no intention of regulating those that offer IVAs.

Mr Fitzpatrick told the Financial Times: "If we've got a rise in indebtedness, if we've got a rise in people having difficulty servicing that debt ... then maybe the banks are lending too much money, or maybe they're not being as careful as they used to be in scrutinising the applications. If they'd not lent it [the money] in the first place then they wouldn't be in the difficulty of trying to recover it."

He also said that despite the fact that the debt of all British borrowers crossed the £1 trillion mark in 2004 and has continued to rise over the past few years, the government did not need to "take desperate measures" to solve this problem.

There have been a growing number of bankruptcies and IVAs over the past few months. In the second quarter of 2006, there were 66% more insolvencies than during the same time frame last year and 153% more IVAs than last year.

HSBC's chief executive, Michael Geoghegan, said that most major banks in the United Kingdom reported a noticeable increase in bad debt in 2006, and he blames "aggressive marketing by debt management companies".

About Author

Diana Middleton writes on matters relating to debt advice in the UK, and especially debt problems. She is particularly interested in personal finance, writing on best approaches to getting a secured loan, and the background issues relating to debt consolidation.

Source: ArticleTrader.com